Microsoft's anti-piracy effort may have gone a t-shirt too far

Microsoft's anti-piracy effort may have gone a t-shirt too far

Summary: A measure making its way through the Washington state legislature would make it illegal for manufacturers that use pirated software to sell goods in the state. Opponents say they interpret the bill to mean that Microsoft and others can sue U.S. companies that use parts from overseas suppliers.

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Microsoft may have gone a t-shirt too far. The company's latest effort to crackdown on those who benefit from the use of pirated versions of its software targets those who benefit indirectly -- the customers who purchase goods and services from others who used pirated software to produce the goods and services.

A measure making its way through the Washington state legislature would make it illegal for manufacturers that use pirated software to sell goods in the state. Sounds fair. But opponents say they interpret the bill to mean that Microsoft and others can sue US companies that use parts from overseas suppliers who used pirated software, according to the Seattle Times. The "bill would affect retailers that make $50 million or more in annual sales and that have a direct contract with the manufacturer. Retailers would have 18 months to change manufacturers or persuade their manufacturers to pay for software."

What might this look like? Groklaw, a news site covering free and open-source software issues, posted a scathing analysis of the law yesterday.

You heard me right. If a company overseas uses a pirated version of Excel, let's say, keeping track of how many parts it has shipped or whatever, and then sends some parts to General Motors or any large company to incorporate into the finished product, Microsoft can sue *not the overseas supplier* but General Motors, for unfair competition. So can the state's Attorney General. I kid you not. For piracy that was done by someone else, overseas. The product could be T shirts. It doesn't matter what it is, so long as it's manufactured with contributions from an overseas supplier, like in China, who didn't pay Microsoft for software that it uses somewhere in the business. It's the US company that has to pay damages, not the overseas supplier.

Microsoft calls Groklaw's take inaccurate. The company said:

The point around the Excel example referenced from the Groklaw piece is incorrect. Under the law, a company would have to steal/pirate a minimum of $20k of IP before someone could go after them for violation under the law. So in the example noted, where a company used one piece of pirated software, is not an accurate portrayal of how it works. Additionally, Microsoft can’t sue anyone under this legislation – only a manufacturer or State Attorney General can sue another manufacturer who is a competitor, with several key caveats. For example, under the right circumstances Weyerhaeuser could sue Kimberly-Clark, or Ford could sue Toyota, but Nike could not sue, say, Caterpillar or GM. And again, Microsoft or Autodesk or Adobe or whomever’s software gets pirated – none of them can sue, just the manufacturer who is injured by a competitor using stolen software

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The measure is opposed by the Washington Retail Association and some notable PC manufacturers -- Dell, IBM, Intel and Hewlett-Packard -- all of whom argue it holds them accountable for actions they can't control.

Brad Smith, Microsoft's General Counsel, countered that "companies in countries with lax intellectual-property protections laugh at Microsoft when it asks them to pay for software. ‘They tell us they have no intention of paying for something they can steal with immunity,' "

The Washington state House and Senate overwhelmingly passed respective versions of the bill (HB 1495 and SB 5449). Legislators are holding committee hearings to reconcile the two bills and pass a joint version. Louisiana lawmakers passed a similar measure last year.

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Topics: Microsoft, CXO, Enterprise Software, Piracy, Security, Software, IT Employment

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58 comments
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  • RE: Microsoft's anti-piracy effort may have gone a t-shirt too far

    Just when you thought Microsoft had relinquished the d-bag title to Apple. . .
    pueblonative
    • RE: Microsoft's anti-piracy effort may have gone a t-shirt too far

      @pueblonative You know that as long as Ballmer's in charge that will never happen.
      Champ_Kind
    • RE: Microsoft's anti-piracy effort may have gone a t-shirt too far

      Since this law defies common sense, and since the people who lack common sense, supporting this law, clearly can't see beyond their own limitations, I propose we go the other direction.

      Let's immediately propose legislation that would ban banning things.

      Or even better, let's propose legislation that will make it illegal to have any kind of competitive advantage. If you invent a new widget, you must immediately disclose all technical details of the widget to your competitors.

      Or, better yet, let's propose legislation that makes the purchase, sale, acquisition, or use of all products and services illegal.

      NOW THAT should protect everyone's hypothetical revenue stream. Because..... I FIRMLY BELIEVE I'm entitled to about $100M / yr, I can just go sue everyone because my actual revenue stream is much less than that.

      The one thing Enron accounting should have taught us is that there is no such thing as a hypothetical revenue stream, and "anti-piracy" advocates should come up to current on that fact.
      jparr
      • Common sense is not common anymore...

        @jparr

        And the work around to skirt this proposed law is so simple, a child could figure it out... All they need is one distributer (middle man) with 1 computer running a liscenced copy of Windows... And then the companies in the US are buying from a company that does not have pirated software.

        This idea is incredibly stupid.... I bet Ballmer thought it up.
        i8thecat
    • RE: Microsoft's anti-piracy effort may have gone a t-shirt too far

      They will [b]never[/b] relinquish the d-bag title to Apple...
      ScorpioBlue
  • I don't think you could by anything from China.

    And proving it? Come on laws need to be enforceable MS. Don't be Evil like Google.
    Bruizer
    • RE: Microsoft's anti-piracy effort may have gone a t-shirt too far

      @Bruizer Where have YOU been? This is the Microsoft I remember and haven't forgotten about. New decade, same company.
      I12BPhil
      • RE: Microsoft's anti-piracy effort may have gone a t-shirt too far

        @I12BPhil

        Bingo - MS = Scumbags through and through.
        itguy08
    • RE: Microsoft's anti-piracy effort may have gone a t-shirt too far

      @Bruizer Google might do some less than ethical things in terms of privacy, but Microsoft would sue Hell, claim they own the patent on EVIL, and then charge you per sin if they could. Then claim they're patents on evil promote public good. It's the kind of company Satan looks at and goes, "Gawd Damn!!"
      Socratesfoot
    • RE: Microsoft's anti-piracy effort may have gone a t-shirt too far

      @Bruizer Don't have to worry about that, MS wrote the book on EVIL. You must have a short memory but some of Bill's emails were leaked years ago, do you remember "cut off their air supply", that was in reference to Word Perfect, Lotus Spreadsheet, and Netscape, did MS compete fairly or was that why they paid out Billions in Anti Trust fines. What goes around comes around, and boy is it ever going to come around. HP, Apple, and others using non-MS OSes, who is MS going to "sell" to when all OSes are free eventually. This is just another nail in their coffin, I don't see MS hire anyone, but I see Google and Apple etc.
      bigpicture
  • Theses company using stolen software

    Theses company's/country's that using stolen software affect jobs in America and other country that play fair. No software costs means undercutting American jobs. They already have slave labor wages they pay. It affects everyone
    Stan57
    • RE: Microsoft's anti-piracy effort may have gone a t-shirt too far

      @Stan57 I know, compared with equivalent alternatives, MS products are expensive. But still, I think it is not realistic to expect a single extra job, outside the software seller, from this. A few licenses in the administration won't make the difference in production costs. MS is not making production gear, is it? <br>Of course it is a ridiculous exaggeration. Also if only the supplier using the pirated soft is sued. First payments for copying is not part of selling something, but a taxation. Second MS has become a standard at home thanks to illegal copying. It knows that and plays with that. It will not risk that many people, who don't want or can't pay them, would look for alternatives breaking there standard. It's hypocrite. Third the asked prices are completely artificial, MS not offering quality in balance with the total amount of money received for a product. Part of the money is lost in new projects.<br>It's somewhat like MS asking money for the patents on the MS-DOS file system, a thing that for a long time costs no more money to them, is totally outdated, is hindering progress and just surviving to provide them money. Artificially kept in place via their monopoly's and influence in standard comity's.
      bezoeker
  • No way it can survive ...

    This law is almost certain to be ripped to shreds by constitutional challenges. With it, states are attempting to regulate interstate commerce AND international commerce. They can't do that constitutionally. They are also attempting to hold third parties accountable for accusations of illegal actions by others. That is going to get a stiff constitutional challenge as well. I could go on and on. These types of laws open a legal Pandora's box and the federal courts will simply not allow that to happen. One way or another, this will backfire on MS in a major way before all is said and done. MS is unhappy because they can't control the legal process in every country on the face of the earth. Though luck. Who can? As Bill Gates is famously quoted "You must accept that life is unfair."
    George Mitchell
    • You said it

      @George Mitchell
      sackbut
  • I've said it before and I'll say it again.

    MS = Extortionists. Tony soprano would be proud.

    We have to wake up and stop buying their stuff if they continue down this path. The only way they will get the message is to see sales and profits decline. IOW = give MS the big middle finger!
    itguy08
    • RE: IOW = give MS the big middle finger!

      @itguy08

      Done that 4 years ago when I ripped a <b>WindoZE XP infected</b> hard drive out of this computer.

      I replaced it with a new hard drive and installed Linux on it. I have not regretted it since.
      fatman65535
      • I don't think I ever saw a pirated Linux Disk.

        @fatman65535 ...Just download the .iso file from the trusted website like <a href="http://linuxmint.com" target="_blank" rel="nofollow"><a href="http://linuxmint.com" target="_blank" rel="nofollow"><a href="http://linuxmint.com" target="_blank" rel="nofollow">http://linuxmint.com</a></a></a> and burn your own legal copy for free. For people having Ubuntu or Mint already, I recommend getting K3B from the software manager. Initially, it was for KDE, but now they make a version for Gnome.<br><br>If people don't have Linux, I recommend Active Iso Burner, it's a free .iso burning program, since Windows does not natively burn .iso's. I set the speed to 1X.<br><br>After that, it's Microsoft history.
        Joe.Smetona
  • Maybe the best thing to do is to stop the goods at the boarder

    It should not be up to the individual business to know if a foreign company is playing fair. If the government can prove it, stop the goods from even getting into the country (i.e. you steal from us, we don't do business with you).
    happyharry_z
    • RE: Microsoft's anti-piracy effort may have gone a t-shirt too far

      @happyharry_z

      exactly. I tend to think that the big shots of these companies are getting rich by stealing software and paying their employees slave wages. The company is not gonna suffer but the people that work for them already are.
      bobiroc
  • This is a tough case

    While it is not right that these companies in other countries (and even some in the US most likely) use any software from Microsoft or any other company without obtaining it legally companies like Dell, HP, Intel raise a good argument too.

    Maybe Microsoft is being a bit extreme here but I think they are just trying to get the point across some action needs to be taken even if it is not this.

    If Microsoft knows that a certain company "X" is using pirated software to run their business then maybe some joint venture can be made with the other companies that buy from Company X to press them they will lose business until they are legal. Change is not going to happen overnight but if the government of the country where Company X is located is not willing to comply then it may be time for some harsher treatment.
    bobiroc